Tara Lachapelle is a Bloomberg Gadfly columnist covering deals. She previously wrote an M&A column for Bloomberg News.

Could it finally happen -- a takeover of Illumina? And by an acquirer other than Roche? 

According to a StreetInsider report Thursday citing a person claiming to have knowledge of the matter, life sciences giant Thermo Fisher made a $30 billion all-stock acquisition proposal for Illumina, the DNA sequencing company that spurned an offer from Roche several years ago. You can never put too much faith in rumors of mega-mergers, especially in the health-care industry where they're constantly swirling. That said, it certainly wouldn't be surprising to see either Thermo Fisher or Roche sniffing around.

Back in March, a filing from Thermo Fisher gave the impression that it might be gearing up for another acquisition. It was a mixed securities shelf registration that said the $61 billion company could issue debt or equity to use for acquisitions or other "general corporate purposes." Thermo Fisher's last big purchase was Illumina rival Life Technologies in 2014 for about $15 billion including debt (more on that later). It also scooped up smaller target Affymetrix for $1.1 billion in April.

While there really aren't any glaring holes in Thermo Fisher, the company has clearly taken a keen interest in diagnostic equipment, which is used by scientists in laboratories that are trying to do things like come up with tailored cancer treatments using a patient's own genetic makeup. Analysts have pointed to a handful of companies that Thermo Fisher could pursue, but with Illumina there would be antitrust hurdles. Before being sold to Thermo, Life Technologies was listed in Illumina's filings as one of its biggest competitors. The math would also be an obstacle -- it'd be a small premium for Illumina and a hit to Thermo Fisher's earnings: 

Back of the Envelope
The details are still murky, but StreetInsider says Thermo Fisher is offering $30 billion entirely in stock. If that's the case, the deal could be dilutive to its earnings next year (before synergies).
Source: Bloomberg

If there is truth to the speculation, it's hard to imagine Roche not getting involved. The $220 billion Swiss company, which gets the majority of its revenue from pharmaceuticals, is still signaling interest in diagnostics. It was said to have approached smaller target Pacific Biosciences of California about a deal earlier this year, but the parties couldn't agree on price.

Price was also the issue for Roche back in 2012  when it walked away from Illumina and the target was only a $6 billion company. It's quadruple that size now. However, it's gotten much more profitable and has been doing some interesting things on the R&D side.

Illumina formed Grail to develop a cancer-screening blood test, with investments from the likes of Bill Gates and Jeff Bezos. (As Gadfly's Max Nisen warned in January, though, Grail may not pay off for investors.) The company has also teamed up with private equity to create Helix, a genetic-sequencing startup for people to learn about their family history and health. Analysts seem lukewarm on Illumina overall at the moment and its stock has certainly lost momentum after a strong run from 2012 to 2015:

Illumina has hit some bumps the past couple of quarters. About 60% of analysts have a "hold" rating and a third recommend buying the stock. Morgan Stanley cut it to the equivalent of a "sell" last month.
Source: Bloomberg

Nothing a little bidding war can't fix.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

To contact the author of this story:
Tara Lachapelle in New York at

To contact the editor responsible for this story:
Beth Williams at